Shippers bemoan proposed California ports tariff increase

Thursday, May 02, 2013

Freight and shipping interests in California are decrying plans by ports in the state to adopt general rate increases in accordance with California Association of Port Authorities (CAPA) recommendations.
CAPA recommended the 11 ports in the state raise tariffs by 1.7 percent by July 1 as part of its annual rate increase guidelines. Recent or pending hearings on the increase are occurring in Oakland, Los Angeles and Long Beach, the three biggest container ports in California.
In a letter to CAPA President Wayne Darbeau in late April, the Pacific Merchant Shipping Association said the increases don’t jive with economic conditions faced by terminal operators and shipping lines.
PMSA President John McLaurin also emphasized that California ports are facing increased competition from ports in Canada, Mexico and the U.S. east and gulf coasts.
“The annual GRI rate increase automatically increases rates without regard to the economy, the state of the industry, impact on competitiveness or financial standing, or needs of a port authority,” McLaurin wrote. “The proposal comes at a time when California ports are losing market share.”
McLaurin sent a similar letter to the Oakland Port Commission, which is due to hear the matter May 9.
Meanwhile, the Los Angeles Customs Brokers and Freight Forwarder Association (LACBFFA) expressed its opposition to the increase in a letter to the Los Angeles Harbor Commission April 30.
“We realize that the port will have to raise rates from time to time,” the association wrote. “We are concerned to see the Port of Los Angeles recommend a policy increasing rates annually, automatically tied to the Consumer Price Index without consideration of economic or market conditions. California ports are continuing to lose market share to foreign ports.
“This annual automatic rate increase can foster the negative perception that California ports are adding fees and costs, when other ports are not doing so. We believe that the port should be incentivizing cargo to come to Southern California by staying competitive in the market.” - Eric Johnson